Eight leading telcos in fierce fray for spectrum auction

The government's hopes on the success of the forthcoming spectrum auction have risen as the eight leading telecom companies in the fray have furnished bank guarantees that add up to an impressive Rs 11,555 crore.

Bharti Airtel and Vodafone will have to bid aggressively to retain the prime 900 MHz band spectrum in the lucrative Delhi, Mumbai and Kolkata circles as their licences expire in November and Mukesh Ambani- led Reliance Jio (RJI) will also compete against them.

Deep pockets
A senior official said that this is indicated by the fact that Airtel has furnished a bank guarantee of Rs 3,700 crore while Vodafone and surprise entrant RJI have submitted sureties of Rs 2,800 crore and Rs 2,600 crore respectively. " Reliance Jio is backed with deep pockets and bidding is bound to be fierce," the official added.

The size of the bank guarantee normally reflects the amount of spectrum that the company is seriously looking at in the bidding round. Idea Cellular, which has put in Rs 1,565 crore bank guarantee, may bid for 900 MHz in Mumbai.

Anil Ambani- headed Reliance Communications' offer of a Rs 200- crore bank guarantee and Tata Teleservices putting in a Rs 267- crore bank guarantee indicate they may bid for small chunks of spectrum to fill gaps in their network.

Sources said that Norway's Telenor has offered a Rs 330- crore bank guarantee while Aircel has put in a Rs 100- crore surety.

RJI is strongly considering participating in 900 MHz auction in category A and B circles, where spectrum is up for renewal in 2015 and 2016. The 900 MHz spectrum is efficient for voice and incurs just half the amount on capex for establishing network in comparison to 1,800 MHz.

The government hopes to garner around Rs 11,343 crore from the auction.